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TakingArms wrote:QUOTE (TakingArms @ Jul 26 2013, 01:30 AM) I don't understand why anyone with half a brain would keep it all in cash?

Bonds aren't as good as cash?

Ok after re-reading your post I think I understand what you're getting at - you're getting at the idea expressed in the presentation that a single super wealthy individual doesn't consume as much as multiple median-wealth individuals.

My response to that would be that it is basically true, but the presentation leaves out the fact that individuals with that kind of wealth tend to contribute by investing it. Like I said, nobody keeps their money in cash. Even if you just leave your 30 mil at a bank, the bank lends that money out to businesses who try to make money with it. It is even more likely, though, that significant portions of that cash are going to the stock market or other types of investments that even more directly contribute to economic activity.

I do agree, generally, though that wealth is becoming far too centralized in this country. I think the problem has a lot more to do with the exportation of jobs overseas due to free trade / no tariffs with places with @#(! employment laws, allowing employers to pay people a lot less. Raising capital gains taxes and other taxes on rich people are not going to fix that problem.

I'm waiting for a true global union to arise where workers in the entire industry will have scaled wages. No more running to country x to escape. It will happen eventually, as all of these people working for pennies on the dollar move up in status and begin to demand more rights manufacturing companies will eventually run out of developing countries to exploit. Maybe in two or three hundred years we'll see more widely spread wealth than we've got currently. Maybe we just see another iteration of the union bubble grow and pop like we've seen in the US.... I wish I could see how it all works out over the long haul!

TakingArms wrote:QUOTE (TakingArms @ Jul 25 2013, 05:30 AM) How do you disincentivise massive cash investments? Massive inflation? We're doing a pretty good job of trying to inflate the money supply right now with QE2, etc and super low interest rates. It's not really doing much to increase inflation so far.

What are you talking about? Inflation is pretty bad, especially in housing.


Financing anything should be actively discouraged as debt is a poor foundation for an economy and encourages inflation.

Camaro wrote:QUOTE (Camaro @ Aug 3 2013, 04:21 PM) What are you talking about? Inflation is pretty bad, especially in housing.


Financing anything should be actively discouraged as debt is a poor foundation for an economy and encourages inflation.

He is talking about reality, the inflation rate, and the fact the loan discount rate is so almost zero. The stupidity of CA housing market is not a valid counterpoint... for those who don't own and/or want to own property in that state. If you were going for the idea that the damn dam is going to burst and we could experience 70s style stagflation and multiple decade long recessions like Japan than ok.

Camaro wrote:QUOTE (Camaro @ Aug 3 2013, 04:21 PM) What are you talking about? Inflation is pretty bad, especially in housing.

I was responding to a hypothetical, not expressing an opinion. That being said, a small amount of inflation is good. Massive inflation is bad.

Camaro wrote:QUOTE (Camaro @ Aug 3 2013, 04:21 PM) Financing anything should be actively discouraged as debt is a poor foundation for an economy and encourages inflation.

I'm pretty sure the science of economics disagrees with you. I'm no expert, but borrowing money doesn't necessarily cause inflation. As the economy expands, the money supply has to expand with it. If it expands too fast, you get inflation. If it expands too slow, you get deflation. But it's not a zero-sum game - the economy is always either expanding or shrinking depending on what is happening. Massive inflation is bad, but from what I understand, deflation of any kind is far worse.

Financing is one way the money supply can be expanded. But it doesn't necessarily mean inflation. If someone borrows $1,000, then makes some technological discovery like flying cars, then makes $10,000 from it and pays back $2,000 to whomeever he borrowed the money from, you don't get inflation necessarily. You get a new product worth far more than the money borrowed plus the interest - the economy has expanded.

TakingArms wrote:QUOTE (TakingArms @ Aug 4 2013, 07:35 AM) I was responding to a hypothetical, not expressing an opinion. That being said, a small amount of inflation is good. Massive inflation is bad.

The idea that a small amount of inflation is good is an idea that has been floating around for decades now. The idea behind it is it should compel people to spend money because their money will be worth less tomorrow. However, its effect has proven to be the opposite, with wealth continuing to concentrate in the upper class and large corporations who don't seem particularly eager to spend it.

TakingArms wrote:QUOTE (TakingArms @ Aug 4 2013, 07:35 AM) I'm pretty sure the science of economics disagrees with you. I'm no expert, but borrowing money doesn't necessarily cause inflation. As the economy expands, the money supply has to expand with it. If it expands too fast, you get inflation. If it expands too slow, you get deflation. But it's not a zero-sum game - the economy is always either expanding or shrinking depending on what is happening. Massive inflation is bad, but from what I understand, deflation of any kind is far worse.

Financing is one way the money supply can be expanded. But it doesn't necessarily mean inflation. If someone borrows $1,000, then makes some technological discovery like flying cars, then makes $10,000 from it and pays back $2,000 to whomeever he borrowed the money from, you don't get inflation necessarily. You get a new product worth far more than the money borrowed plus the interest - the economy has expanded.

Borrowing money allows for an expansion in the monetary supply. In fact, the vast majority of the "money" in our economy isn't even hard money, its just loans that have been given out. Holding the interest rates near 0% by the Fed just serve to make matters worse.

That deflation is some boogeyman is a myth propagated by the financial industry because it would cause them to make less money. And since the financial industry is the ones who effectively control the Federal Reserve... gee...

An economy CAN expand with deflation. Deflation has a positive effect on those with fixed incomes as well as those who save. However, the idea is that with floating interest rates (i.e. those not under the command of the Federal Reserve) you would find a LOT of people saving during deflation which would serve to drive interest rates to near 0%. As people take out more loans, then that giant savings pool dries up until interest rates become considerably higher. Over time this leads to small periods of inflation and deflation and leads to long term inflation around 0%. All the while the economy is still able to grow and programs such as pensions, social security, etc. can be projected with much greater accuracy and funded appropriately.


People always seem to forget that if an economy shrinks by -0.5% (unadjusted for inflation) but inflation was -2.5%, then the net effect was that the economy grew by +2%.


Also, there is no "science" of economics. It is called the dismal science for a reason, it is impossibly hard to quantify anything that is based nearly entirely on human behavior. If you believe Keynesian economics then, yes, I can see why you believe my statements to be false. But I view Keynesian economics as a 80 year old experiment that has proven itself to be no better and probably worse than alternative theories.

What books are you reading? Where do you get this stuff from?

TakingArms wrote:QUOTE (TakingArms @ Aug 5 2013, 04:17 AM) What books are you reading? Where do you get this stuff from?

It is a mix of classical, neo-classical, and Austrian economics with my own twist added in for good measure.

I by and large reject Keynesian economics which is what is frequently taught in schools.

i'm just gonna leave this here

http://www.comedycentral.com/video-clips/l...-invisible-hand